ACA subsidies & premium tax credits

What the premium tax credit is

The premium tax credit is the main form of financial help in the Marketplace. It’s a tax credit that lowers what you pay each month for coverage, and most people take it in advance — applied straight to their premium — rather than waiting until they file taxes. How much you get is based on your household income, your family size, and the cost of a benchmark plan in your area. The lower your income relative to the cost of coverage, the larger the credit.

How much help you get

The credit works by capping what you’re expected to contribute toward a benchmark plan — specifically the second-lowest-cost Silver plan where you live — at a set percentage of your income. The government covers the difference between that capped amount and the plan’s actual premium. You can then apply the credit to any metal tier, so many people use it to buy a Bronze plan for little or nothing, or to make a Gold plan affordable. The percentage you’re expected to pay rises as your income rises.

The 2026 change: the cliff is back

This is the most important thing to understand right now. From 2021 through 2025, temporary "enhanced" rules made the credit larger and extended it to higher incomes. Those enhanced rules expired at the start of 2026, and the credit reverted to its original, pre-2021 form. Two consequences follow. First, the 400%-of-poverty subsidy cliff returned: above that income line there is no premium tax credit at all, where for the past few years there had been. Second, people who still qualify are expected to pay a larger share of their income, so premium payments rose sharply — by analysts’ estimates, roughly doubling on average for subsidized enrollees. For 2026, the 400% cliff falls at about $62,600 for a single person and $128,600 for a family of four.

Cost-sharing reductions

There’s a second kind of help that often gets overlooked. Cost-sharing reductions lower your deductible, copays, and out-of-pocket maximum — not your premium — and they’re available to households under 250% of the poverty level. The catch is that you only get them if you enroll in a Silver plan. For someone with a modest income, a Silver plan with cost-sharing reductions can end up far more generous than a Gold plan, which is why it’s worth checking before defaulting to the lowest premium.

What changed, and what to do

To sum up the new landscape: the enhanced credits are gone, the income cliff is back, premiums are higher for many, and the cap on repaying excess advance credits has been removed — so estimating your income accurately matters more than it used to, since underestimating can mean paying the full difference back at tax time. A few practical moves help. Estimate your income carefully, and if you’re close to 400% of poverty, know that staying just under it can be the difference between a real subsidy and none. If your income is low enough, look hard at Silver plans for the cost-sharing reductions. And compare plans, because a Bronze plan may now be the more affordable choice for some. Congress could still restore a version of the enhanced credits, so it’s worth watching for changes — but plan around the rules as they stand today.